About

Ownership Transparency

Ownership transparency reveals who ultimately owns, controls or benefits from a company or trust fund and the income it generates. This person is sometimes described as the “beneficial owner”. Beneficial owners can be masked through complex structures including layers of anonymous shell companies, trusts, foundations, bearer shares, or chains of third parties, who act on their behalf.  Criminal organizations and people engaging in corruption have consistently taken advantage of opaque corporate structures. Recently, the Panama Papers, LuxLeaks and Bahamas Leaks have revealed how companies are used to move money by obscuring ownership.

For companies, ownership transparency means publishing structures and beneficial ownership disclosures in open data. Open data relates to information being organised into clear categories, and compared and combined into other datasets, enabling other companies and citizens to use and analyse data easily, helping to build trust and understanding. Companies can publish their ownership on OpenOwnership, The Global Beneficial Ownership Register.

The momentum behind transparent company ownership has increased exponentially in recent years, and accelerated in the wake of the Panama Papers in 2016.

Major international organizations, governments and civil society around the world have come together to advance reforms which can limit the misuse of legal structures – which conceal the proceeds of corruption and other financial crimes- and help to create more stable and competitive markets. See the progress from governments in our timeline below, then join us and explore how you can take action with your company.

2016
2016

2013

2014

2015

2016

2017

February 2016

Members of the U.S. House of Representatives Carolyn B. Maloney and Peter King reintroduced the Incorporation Transparency and Law Enforcement Assistance Act, and Senator Sheldon Whitehouse introduced companion legislation in the Senate.  The legislation seeks to require the U.S. Treasury Department and the states to collect, maintain, and update beneficial ownership information on legal entities for law enforcement purposes. The bill has yet to be passed into law.

April 2016

The governments of the UK, France, Germany, Spain, and Italy announce that they will allow data on company beneficial ownership registers and new registers of trusts to be exchanged between the five countries’ tax and law enforcement agencies.

May 2016

South Africa’s 3rd Open Government Partnership National Action Plan includes a commitment to collect information on the beneficial owners of all companies incorporated in the Republic of South Africa.

September 2016

101 countries of the 137 member countries in the OECD’s Forum on Transparency and Exchange of Information for Tax Purposes have now made commitments to automatic exchange of information, including beneficial ownership information, that is relevant to effective exchange of information for tax purposes.   

G20 Leaders at the Hangzhou Summit pledge to continue to implement existing commitments to tackle corruption and release their 2017-2018 AntiCorruption Action Plan. One of the key commitments is exclusively devoted to the identification of beneficial owners of companies. You can read the AntiCorruption Action Plan here.

Feb

Members of the U.S. House of Representatives Carolyn B. Maloney and Peter King reintroduced the Incorporation Transparency and Law Enforcement Assistance Act, and Senator Sheldon Whitehouse introduced companion legislation in the Senate.  The legislation seeks to require the U.S. Treasury Department and the states to collect, maintain, and update beneficial ownership information on legal entities for law enforcement purposes. The bill has yet to be passed into law.

Apr

The governments of the UK, France, Germany, Spain, and Italy announce that they will allow data on company beneficial ownership registers and new registers of trusts to be exchanged between the five countries’ tax and law enforcement agencies.

May

South Africa’s 3rd Open Government Partnership National Action Plan includes a commitment to collect information on the beneficial owners of all companies incorporated in the Republic of South Africa.

Sep

101 countries of the 137 member countries in the OECD’s Forum on Transparency and Exchange of Information for Tax Purposes have now made commitments to automatic exchange of information, including beneficial ownership information, that is relevant to effective exchange of information for tax purposes.   

G20 Leaders at the Hangzhou Summit pledge to continue to implement existing commitments to tackle corruption and release their 2017-2018 AntiCorruption Action Plan. One of the key commitments is exclusively devoted to the identification of beneficial owners of companies. You can read the AntiCorruption Action Plan here.

The map below demonstrates the current context of government action on beneficial ownership transparency to the best of our knowledge at November 2016. We will seek to update this page with new developments once every six months.

1. Increasing competitiveness:

Company ownership transparency helps level the playing field and ensures the same rules apply to all companies, not just the powerful or politically connected ones.

2. Managing financial exposure and increasing stability:

During the 2008 financial crisis, many companies struggled to determine what risks they incurred from collapsing investment banks, because the complex web of corporate ownership propping up their investments was too difficult to untangle. It is a requirement for financial institutions to practise Know Your Customer (KYC) due diligence, to protect them from fraud or deals going bad. As a result, they are better able to manage risk and reduce the liability of doing business with politically exposed persons (PEPs) or even being linked to financing terrorism.

Overcoming a culture of impunity: Arguably, the strongest incentive to engage in corrupt activities is the knowledge that you can get away with it. According to a 2011 United Nations Office on Drugs and Crime (UNODC) report, global detection rates of the movement of illicit funds are estimated to be as low as 1 per cent for criminal proceeds, while the seizure rate is thought to be even lower, at 0.2 percent. Impunity fosters public distrust and enables crime and corruption. Coming clean on company ownership could turn this tide.

3. Overcoming widespread public mistrust:

Trust in large institutions – governments and business – is at an all time low. Being transparent about ownership and ensuring that you know who you are doing business with can contribute to building trust and integrity in your business. Making beneficial ownership transparent across markets can help rebuild trust that governments are giving contracts to the best businesses, and that businesses are acting ethically more generally.

Read more in the “Business Case for Beneficial Ownership Transparency” here.

While both international organizations and national governments have achieved significant progress on company ownership transparency, some major barriers to making it an accepted global norm for business still remain.

1. Developing Global Standards

Agreeing on and adopting a universal definition of beneficial ownership across countries, and global institutions and organizations, has been a challenge. In addition to a uniform definition a minimum standard for collecting ownership information is also needed to ensure data can be shared, and used to trace owners globally.

2. Verifying Beneficial Ownership Information

It is difficult for government entities to ensure that ownership information which is collected is up-to-date and accurate. A possible solution to this might involve auditing the information. Governments and regulatory agencies could require companies to have their beneficial ownership information audited in the same manner financial statements are audited, but global standards for this are yet to be explored.

3. Information Sharing

Collecting company ownership information is simply not enough to tackle the misuse of corporate vehicles for illicit purposes. Countries must also develop a willingness and ability to share this information. The flow of money is no longer confined to national borders and neither should ownership information. In many countries however, antiquated privacy laws create barriers to information sharing, which must be addressed in order to build a comprehensive information-sharing network. An emerging solution for this is the development of a global register which will aggregate information from national registers in open data. This will make information accessible across jurisdictions and provide a platform for companies to disclose their own ownership information and/or to require their suppliers and partners to do so.

4. Closing Legal Loopholes

Legally requiring the disclosure of beneficial ownership information is only half the battle to tackling illicit activity. Governments should also consider refining legislation around the creation of corporate vehicles to reduce legal loopholes and minimize their misuse. Further, the professionals involved in the creation of corporate vehicles for should face legal repercussions if they are found to be complicit in cases where the hidden structures they help to create are used for crime and corruption.